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Kroenke - Experiencing MIS 4th Ed - Instructor’s Manual

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. / Business Processes, Information Systems, and Information
LEARNING OBJECTIVES
  1. Explain why the GearUp team needs to understand business processes.
  2. Describe what is meant by a business process.
  3. Explain how information systems improve process quality.
  4. Define “information.”
  5. Describe the data characteristics necessary for quality information.

CHAPTER OUTLINE
  • Why does the GearUp team need to understand business processes?
  • What is a business process?

How GearUp works

The existing GearUp process

  • How can information systems improve process quality?

What is process quality?

Using information systems to improve process quality

  • What is information?

Definitions vary

Where is information?

  • What data characteristics are necessary for quality information?

Accurate

Timely

Relevant

Just barely sufficient

Worth its cost

  • How does the knowledge in this chapter help you?

Experiencing MIS INCLASS EXERCISE 2

How Much Is a Quarter Worth?

  1. Use Google or Bing (or another Internet search engine) to search for the phrase “quarter versus semester.” Read several of the opinions,then adjust and augment the tableof pros and cons.

Student answers will vary. Here are a few new comments gleaned from the search result postings:

Pros / Cons
Quarter
System / More opportunity to drop course and retake without losing too much time / Less time to adjust to a new course and decide whether to drop or stick it out
Constant homework
Transfer of course credits to most universities can be a problem
Semester
System / Time to adjust to professor and decide whether to stick out the course
  1. List business processes involved in starting a new term. Examples are processes to develop the roster of classes, to staff classes, and to enroll students. Name as many more of the processes required as you can. Examine the list of processes presented in the case study above and addprocesses that you think may have been omitted, if any.
  • The professor’s preparation of the course. (In the quarter system, professors may teach more different courses and have more unique preparations. This requires the professor to prepare more unique content across the multiple preparations—a cost to the professor.)
  • Post lists of required textbooks
  • Schedule classrooms
  • Recruit and hire any needed adjunct faculty
  • Handle any waiting lists for classes
  1. List the sources of costs for each of the two processes you chose in your answer to step 2.

Recruit and Hire Adjunct Faculty Process Costs: Costs of advertising the openings, screening applicants, conducting interviews, performing EEOC reviews, orienting the selected adjunct faculty members. Also costs incurred by the candidates to prepare and submit job applications.

Waiting List Process Costs: Cost of determining the urgency of unfilled course requests based on factors such as graduation requirement or time to complete program; cost of compiling urgent course request waiting list; cost for administrators to arrange for additional seats in existing courses or hire more teachers for new courses; cost of notifying students of waiting list disposition; cost of student delay in graduation because of unavailable courses; cost of lost students who transfer because of unavailable courses.

  1. Considering just the College of Business at your university, estimate each of the costs for processes. Make and justify assumptions about labor rates and other factors.

Student answers will vary. Actual labor rates and labor hours are estimates to illustrate the source relative cost levels.

Recruit and Hire Adjunct Faculty Process Costs: At minimum, costs will include:

  • Clerical costs (organizing applications, processing paperwork): 40 hours *$25/hour labor = $1,000
  • Administrative costs: creating position announcement, reviewing applications, interviewing applicants): 30 hours * $100/hour labor = $3,000
  • Staff costs (EEOC procedures and review) 20 hours * $50/hour labor = $1,000
  • Applicant costs: 10 hours * $50/hour labor = $500

Waiting List Process Costs: At minimum, costs will include:

  • Clerical/advisor costs: 40 hours per semester * $25/hour labor = $1,000
  • Administrative costs: 4 hours per semester * $100/hour labor = $400
  1. Assuming that costs for other colleges are the same as for the College of Business (an unrealistic assumption; law and medicine probably have higher costs), what is the total cost forthe two processes you selected for your university, in total?

Student answers will vary. There is the cost of the registration system plus the need to deal with waiting lists. In question 4, the waiting list processing costs at least $1,400 per semester for the CBA; multiplied by 5 to include all five colleges and the per semester cost is $7,000 just for the waiting list process.

  1. List and describe five factors that you think could be keeping a university that is on a quarter system fromconverting to a semester system.

Inertia; logistics of the conversion process; resistance from faculty, students, administrators, alumni, employers who like the quarter system; preference for the advantages of the quarter system; “this is how it has always been done here” attitude.

  1. Suppose you actually did this at your university. Explain how you could use this experience to demonstrate yourcapabilities in a job interview.

A student who actually did perform an analysis such as this for their university could refer to the experience in a job interview in many ways. Primarily, this analysis demonstrates the ability to understand the university from a business process perspective and to evaluate these processes from both efficiency and effectiveness perspectives. The student performing this analysis would clearly be demonstrating his/her nonroutine skills of abstract reasoning and critical thinking.

USING YOUR KNOWLEDGE

1.Consider the four definitions of information presented in this chapter. The problem with the first definition, “knowledge derived from data,” is that it merely substitutes one word we don’t know the meaning of (information) for a second word we don’t know the meaning of (knowledge). The problem with the second definition, “data presented in a meaningful context,” is that it is too subjective. Whose context? What makes a context meaningful? The third definition, “data processed by summing, ordering, averaging, etc.,” is too mechanical. It tells us what to do, but it doesn’t tell us what information is. The fourth definition, “a difference that makes a difference,” is vague and unhelpful.

Also, none of these definitions helps us to quantify the amount of information we receive. What is the information content of the statement that every human being has a navel? Zero—you already know that. However, the statement that someone has just deposited $50,000 into your checking account is chock-full of information. So, good information has an element of surprise.

Considering all of these points, answer the following questions:

  1. What is information made of?

Information is made of data that has been processed in some way to be meaningful to the recipient. (LO: 4, Learning Outcome: Describe the components of an information system (IS),AACSB: Reflective Thinking Skills)

  1. If you have more information, do you weigh more? Why or why not?

If you are carrying around a 1,000-page report that contains information, then you might say information causes you to physically weigh more. In most situations, however, having more information does not result in a weight gain. It results in a change in your brain.(LO: 4, Learning Outcome: Describe the components of an information system (IS),AACSB: Reflective Thinking Skills)

  1. If you give a copy of your transcript to a prospective employer, is that information? If you show that same transcript to your dog, is it still information? Where is the information?

A transcript from a prospective employee is meaningful to an employer trying to fill a position. The content of the transcript (courses taken, grades earned) has value in the hiring context. A dog has no use for the content of the transcript and so it has no value to him. If the piece of paper the transcript is printed on is crumpled up, then it might have value to the dog as an item to chase or tear up (depending on the dog).(LO: 1, Learning Outcome: Describe the components of an information system (IS),AACSB: Reflective Thinking Skills)

  1. Give your own best definition of information.

Student answers will vary. Despite its subjectivity, I still like “information is data that is meaningful within a context.” Also, look for the fact that data usually must be transformed in some way to be meaningful; and to provide value, the information must make a difference to the recipient.(LO: 4, Learning Outcome: Describe the components of an information system (IS),AACSB: Reflective Thinking Skills)

  1. Explain how you think it is possible that we have an industry called the information technology industry, but we have great difficulty defining the word information.

We have many everyday terms that are difficult to define. We speak of the health care industry, but we typically only define “health” in the negative (the absence of disease). This is just another example of a term that is broadly understood but difficult to define precisely.(LO: 4, Learning Outcome: Describe the components of an information system (IS),AACSB: Reflective Thinking Skills)

2.The text states that information should be worth its cost. Both cost and value can be broken into tangible and intangible factors. Tangible factors can be measureddirectly; intangible ones arise indirectly and are difficult to measure. For example, a tangible cost is the cost of a computer monitor; an intangible cost is the lost productivity of a poorly trained employee.

Give five important tangible and five important intangible costs of an information system. Give five important tangible and five important intangible measures of the value of an information system. If it helps to focus your thinking, use the example of the class scheduling system at your university or some other university information system. When determining whether an information system is worth its cost, how do you think the tangible and intangible factors should be considered?

Tangible costs:

Cost of hardware components

Cost of software components

Cost of database components

Cost of training users

Cost of hiring users and/or developers

Intangible costs:

Cost of searching for information that is difficult to find

Cost of making a decision when information arrives after the fact

Cost of frustration when system does not work as expected

Cost of decision errors when information is inaccurate

Cost of employees trying to work around or avoid a problematic system

Tangible value:

Increased sales to new customers

Increased sales due to more repeat customers

Increased employee productivity

Decreased hiring costs due to lower employee turnover

Increased quality resulting in fewer defects in output

Intangible value:

Increased employee satisfaction

Increased customer satisfaction

Improved management decision making

Decreased employee absenteeism

Decreased employee turnover

To determine if an information system is worth its cost, the values of all relevant tangible costs and benefits should be estimated as accurately as possible (easier said than done, of course). In addition, the values of intangible costs and benefits can sometimes be estimated with a little effort. If the intangibles cannot be quantified, they should at least be described so that their existence is recognized and appreciated.(LO: 5, Learning Outcome: Describe the components of an information system (IS),AACSB: Analytical Skills)

3.Suppose you manage the Buyers at GearUp and you have been asked to help determine the requirements for a new vendor selection information system. As you think about those requirements, you wonder how much autonomy you want your employees to have in selecting the vendors and products to sell. You can develop a system that will make the vendor/product selection automatically, or you can build one that allows employees to make that selection. Explain how this characteristic will affect:

  1. The skill level required for your employees.

A system that automatically selects the vendor/product will require employees with fewer skills than would a system that allows the employees to make that selection. With an automated system, the employee simply needs to inform the system that a vendor/product selection must be made, the system makes the selection, and the employee sends the purchase order to the selected vendor. With a manual system, the employee must weigh the relevant selection factors and use his/her knowledge, experience, and judgment to select the vendor/product. (LO: 3, Learning Outcome: Discuss the role of information systems in supporting business processes,AACSB: Analytical Skills)

  1. The number of employees you will need.

Use of a system that automatically selects vendor/product will reduce the number of employees needed, because a portion of the business process has been moved to the computer side and less work is done on the human side. With a manual system, more work is performed on the human side, thereby requiring more employees.(LO: 3, Learning Outcome: Discuss the role of information systems in supporting business processes,AACSB: Analytical Skills)

  1. Your criteria for hiring employees.

A system that automatically selects the vendor/product will simplify employee hiring criteria. As the procedures followed on the human side have been simplified, lower standards in terms of experience and knowledge of purchasing will be acceptable. With a manual system, employee hiring criteria will be higher and more complex, because employees with experience and a good understanding of vendor/product selection decisions will be needed.(LO: 3, Learning Outcome: Discuss the role of information systems in supporting business processes,AACSB: Analytical Skills)

  1. Your management practices.

When using a system that automatically selects the vendor/product, management oversight will focus primarily on ensuring that the rules followed by the system are correctly established. Once established, management can rely on the system to follow these rules. With a manual system, management will need to ensure that the employees are properly trained, and then continual management oversight will be needed to monitor the employees’ performance and ensure that proper vendor/supplier selection decisions are being made.(LO: 3, Learning Outcome: Discuss the role of information systems in supporting business processes,AACSB: Analytical Skills)

  1. The degree of autonomy for your employees.

A system that automatically selects the vendor/product substantially reduces employee autonomy. A system that gives the employee the task of selecting the vendor/product makes the employee much more autonomous and adds a considerable amount of interest and challenge to the job.(LO: 3, Learning Outcome: Discuss the role of information systems in supporting business processes,AACSB: Analytical Skills)

  1. Your flexibility in managing your department.

Having a human perform the selection of the vendor/product will keep the management of the department much more flexible. As vendor/product selection criteria change and evolve, it will be much easier to modify and adapt the behavior of humans in performing this task. Although the computer can follow whatever decision rules it has been given quite easily, it is harder to adapt the rules it follows quickly and easily. In addition, the computer cannot recognize situations in which its rules need to be changed, whereas a human can recognize that changing environmental conditions may necessitate a change in selection criteria.(LO: 3, Learning Outcome: Discuss the role of information systems in supporting business processes,AACSB: Analytical Skills)

4.Suppose management has left you out of the requirements definition process. Explain how you could use the knowledge you developed in answering this question to justify your need to be involved in the requirements definition.

If I (as Buyer Manager) am left out of the requirements definition process, I will not be able to contribute my knowledge and expertise about vendor/product selection to this critical system development process. Without that knowledge, the development team may decide to automate this process because of factors such as cost savings, efficiency, and the consistency of this approach. Although these are important factors, my input can point out the other important issues, such as employee autonomy and management flexibility. It is important that all sides of the issue be explored before a key decision such as this is determined.(LO: 3, Learning Outcome: Discuss the role of information systems in supporting business processes,AACSB: Reflective Thinking Skills)

COLLABORATION EXERCISE 2
  1. In Figure 2-8, explain why inventory must be allocated.

Inventory must be allocated to the order during the check for inventory availability so that the inventory on hand is not sold to another customer. Reserving the inventory for this order reduces the quantity available to fill other orders. If the order is later rejected because the special terms are not approved, then the inventory must be released and added back to the quantity available to fill orders, so that subsequent orders are not incorrectly rejected for insufficient inventory available.(LO: 2, Learning Outcome: Discuss the role of information systems in supporting business processes,AACSB: Analytical Skills)

  1. Based on Figure 2-8, explain why credit must be allocated to customers. What is the business consequence if these allocations are not adjusted when special terms are not approved?

Customers are typically granted a specific credit limit based upon an analysis of the customer’s credit worthiness. When a customer buys more products on credit, the amount of available credit must be reduced by the amount of the purchase. This prevents the customer from purchasing more than his/her credit line. If the customer order is rejected due to disapproved special terms, the customer’s available credit must be increased by that purchase amount. Otherwise, the customer’s available credit is smaller than it should be and the customer will be prohibited from utilizing the entire credit line for future purchases.(LO: 2, Learning Outcome: Discuss the role of information systems in supporting business processes,AACSB: Analytical Skills)